Daily roundup of research adn analysis from The Globe and Mail’s market strategist Scott Barlow
Credit Suisse (for now) global strategist Andrew Garthwaite posted his sector scorecard, identifying the most attractive industries for investment,
“Our scorecard looks at valuation; conventional (book, earnings and dividend …), fundamentals (i.e., long-term growth, credit rating, RoE/CFROI v volatility of each and balance sheet), earnings momentum, price momentum, positioning, and macro sensitivities (to our macro view)… Global Sectors: Banks (Unchanged), Insurance (+1), and Construction Materials (+1) are at the top of the composite scorecard; with Tech hardware (unchanged), Utilities (-2), Food Retail (Unchanged) at the bottom. On valuation, Banks (Unchanged) and Energy (+2) are at the top. Tech Hardware is now 1.43 std oversold and Hotels 1.6std oversold. Best earnings revisions are Construction Materials and Hotels …Regions scorecard: Our scorecard looks at monetary conditions, economic momentum, valuation, positioning, regional risk appetite and macro sensitivities. UK (+2) tops the composite scorecard, followed by Japan (-) and the Europe Ex UK (+1). GEM (-3) and US (unchanged) are at the bottom. "
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BMO economist Shelly Kaushik detailed the ongoing slowdown in domestic mortgage growth,
“Growth in Canadian household borrowing has slowed markedly since the Bank of Canada started raising rates in 2022, with the latest numbers indicating loans edged up just 0.2% in January. Mortgages drove the acceleration in borrowing earlier in the pandemic, thanks to the red-hot housing market. And they’re also leading the way down as the housing market cooled rapidly, most recently posting a mild 0.3% growth rate to start 2023. Unrounded, that’s the weakest growth in mortgages since the stress test was announced in 2018. As the BoC is now on an indefinite ‘conditional’ pause in rate hikes, we’re likely to see mortgage loan growth stabilize in the months ahead. And, rapid population growth will support mortgage demand over the medium term.”
“Canadian mortgage growth stalls but maybe not for long (BMO)” – (research excerpt) Twitter
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Also from BMO, chief strategist Brian Belski likes materials stocks (although only recommends a small overweight),
“According to our work, the Canadian Materials sector’s strong exposure to gold stocks adds a level of tactical defense against periods of heightened volatility as gold equities tend to meaningfully outperform during these periods and during recessionary years. Furthermore, fundamentally the Canadian Materials sector continues to check all of our boxes – namely, valuations are below historical averages, operating metrics are firmly above historical averages, cash generation is near record levels, cash is being returned to shareholders at near record pace, debt to equity is well below historical average, and capital spending remains moderate. Therefore, we believe the broad sector, including base metals, remains well positioned from an operating leverage and valuation position to outperform when commodity prices and growth headwinds subside”
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Diversion: “Amazon is about to go head to head with SpaceX in a battle for satellite internet dominance” – M.I.T. Technology Review
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